The Manufacturer reader David Grasby writes in with his evaluation of the industry...
The views expressed in this article represent those of the writer, not necessarily The Manufacturer . Leave your own views in the box below the article.
Declaration of interest – I run a manufacturing projects management company; the benefits of which I will advocate over conventional consultancy in this opinion piece.
Manufacturers in the UK are facing uncertain times as the lack of credit is quickly filtering through the system. Customers are reducing/cancelling orders leaving manufacturers with production voids to fill whilst overheads remain the same.
Help seems to be finding its way to those who shout the loudest ie Car Industry, but what about the small manufacturers? What will happen to them?
Put quite bluntly they will sink or swim.
Estimates are being headlined everyday in the press at the number of small businesses that are not going to survive the downturn. So what are they to do, do they wait to find out if they are one of the chosen few, or do they do something about it. If so, what?
Companies that Sink
The companies that will sink are the ones who wait for Market changes or Government assistance. No one has a crystal ball, however we can all second guess the market isn’t going to start to recover for a minimum of 1-2 years, As a knock on effect the companies further up the supply chain will be analyzing there businesses and trying to take costs out.
They will be knocking on your door expecting higher service levels and lower costs.
This will be impossible to do as your overheads will only be increasing as you inventory levels rise and sales fall. You either need owners with very deep pockets or the divine intervention of Gordon Brown and government assistance. Which if it did happen we can almost guarantee will be too little too late….
Companies that Swim
The Swimmers, well they have to adapt and adapt quickly.
These companies need to step back and take a look at the business.
You cant rely on the same steady stream of orders, You must become flexible in your approach to manufacturing. Reducing overheads, reducing inventory Levels and becoming in General more ‘Lean’. Before people run for cover expecting a tirade of TLA’s then don’t.
Lean manufacturing can be approached very basically and with common sense.
You need to concentrate on how to get the required volume of raw materials into the company at the right time to produce the exact amount of products as quickly as possible with as few the minimal resource. Delivered to your customer in the required timeframe at the required quality level.
So how is this achieved?
Unfortunately the very nature of being a small manufacturer means you tend not to have the in-house expertise to deal with the complete solution, so people tend to bury there heads in the sand. At this point you need some help from the ‘outside’.
You could go down the consultancy route, here consultants will look at your business and suggest a list of actions which you could take. Charging up to £1500 day each they will come into your company and produce theoretical solutions to your problem, they will not fix the problem, merely highlight it with a list of corrective actions. You will then need to get another set of consultants in to effect the remedies… This can (will) be both time consuming and expensive, you will also feel they have only highlighted points you already knew about… Consultants when used in the right context can be invaluable to a company, however a small manufacturer who needs to decide on the way they operate quickly and effectively and put this into practice is not the right context.
It will leave you with just as many problems and several thousand ££’s worse off.
So what’s the alternative?
One option is to utilise a manufacturing projects company who will project manage your changes.
What you get in return are clear options on what needs to be done, together with a project plan/ costings and a project service that will manage the project from conception through to completion, allowing you to concentrate on what you do best.
Get a Grant
There is help out there !!!
OK the government have managed to squander trillions of £££’s keeping the bankers afloat on there yachts, but just before doing this they put a few quid a side for grants for manufacturing companies.. Contact business link who will steer you in the right direction. it is possible that a proportion of the money can be returned in the form of a grant.
Whatever you decide to do, please decide to do something. Waiting for change will result in failure. Formulate a plan, get help and drive the plan forward. No one can guarantee survival, but making the changes will make you a more lean competitive force in the market. Whilst your competition fail, you can pick up market share and your new approach to running your business will help you adapt to growth as well as decline.
By David Grasby
David runs Factory Projects Manufacturing Solutions. See factoryprojects.co.uk.